ConocoPhillips refining spinoff to take pipelines with it

Updated 9:47 pm, Wednesday, September 7, 2011

The massive independent refining company that will spin off from ConocoPhillips next year also will absorb the corporation's pipelines and joint venture projects, CEO James Mulva said Wednesday.

Speaking at the Barclays Capital CEO Energy-Power Conference in New York, Mulva detailed a roughly 70-30 split of the company's assets and debt between ConocoPhillips and the refining spinoff, which remains unnamed.

ConocoPhillips announced last month that it would split in two, forming an oil and gas production company and a large independent refiner. It follows a similar move by Marathon Oil Corp., which completed its split in June.

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The spinoff will become the new partner in the corporation's joint ventures in pipeline company DCP Midstream Partners and chemicals company Chevron Phillips.

It also will take over operation of two refineries in Texas and Illinois that ConocoPhillips jointly owns with Canadian oil company Cenovus.

ConocoPhillips' oil and gas production company will retain ownership of joint ventures with Cenovus in Canadian oil sands projects.

ConocoPhillips is based in Houston. It has not announced a headquarters for the new company.

The spinoff is expected to be final in the second quarter of 2012. Shareholders will receive a share of the refining spinoff for every two ConocoPhillips shares, Mulva said.

ConocoPhillips will name top executives of the new companies late this year, said Mulva, who plans to retire when the split is completed.

The new independent refiner will take ownership of $50 billion of ConocoPhillips' $160 billion in assets and it will launch with $8 billion in debt. Mulva said he expects the new company to earn $3 billion a year, mostly profits from its refining segment.

The refining, chemical and pipeline assets that will compose the spinoff employ about 22,500 people, more than half of ConocoPhillips' total workforce, Mulva said. ConocoPhillips owns or partners in 16 refineries worldwide, though the company has committed to shedding underperformers. Meanwhile, Mulva said, the company is well positioned to expand its chemicals and natural gas processing and transportation arms.